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Top Four Things to Watch for in the Mexico Electricity Market in 2017

During the third and fourth quarter of 2016, I spent a lot of time traveling throughout Mexico speaking with Market participants, regulators, and government entities. As those involved in the market already know, the Mexican energy industry is going through huge changes, driven by both regulatory and technological advancements, which are expected to continue throughout 2017. These changes come with many opportunities and some challenges, but here are the four key items I believe will make the greatest impact on the market this year.
 

  1. Demand Response

    The Mexico Electricity Market will not be launching Demand Response (DR) capabilities until 2018, but there will be a lot of work that needs to be done in 2017 to prepare for this launch. A new market system will need to be developed to support this market phase and I would expect Mexico officials to be reaching out for help to define what the system should look like. Questions like “How will we do forecasting?” and “What will the integration process entail?” will need to be answered before moving forward.

  2. Regulatory Changes

    There is discussion about Mexico, the U.S., and Canada creating an Energy Reliability Organization (ERO). The ERO will not include all NERC standards, but a subset that will fit the Mexico market will be extended for reliability regulation in Mexico (GADs, TADs, DADs, change to Generation, Transmission, Distribution etc.). Some of these standards will also be modified to accommodate the regional differences between Mexico and the U.S.

  3. Energy Imbalance Market

    There is a lot of discussion about Mexico joining the California Independent System Operator (CAISO) Energy Imbalance Market (EIM) in 2017. The Centro Nacional de Control de EnergĂ­a (CENACE) is still very much in the evaluation phase to make an informed decision on whether they will participate in the CAISO EIM market or not. While it could be the right thing to do economically, there are political and operational impacts that will have to be properly assessed.

  4. Mid-Term and Long-Term Auctions

    The Mexico Electricity Market will embrace the implementation of two additional auctions, a Mid-Term auction and a Long-Term Energy and Clean Energy Certificates auction. The Mid-Term auction is carried out yearly with the auctioned products to be delivered over the next three years. The Long-Term auction considers delivery periods of up to 20 years. The implementation of these auctions will be another important challenge for the Mexican Electricity Market in 2017.
I think we can all agree 2017 will be an exciting year for those participating in the Mexico Electricity Market. I look forward to watching the continued progress and evolution of the market!

About the Author:
Dr. Manuel Santos has more than 30 years of experience developing and implementing power system applications, managing projects, and providing consulting services. As Senior Vice President of international Sales at OATI, Dr. Santos oversees strategy for new and existing sales accounts worldwide, as well as coordinating all existing OATI product roadmaps and identifying new applications needed in the international market. His experience includes 13 years with Siemens Power Systems Control and three years with the Mexican Electrical Research Institute (IIE).

January 18, 2017